Asked by Khristy Ramirez on May 25, 2024
Verified
If the contribution margin is $70,000 and the total of variable expenses is $50,000, then total sales is $120,000.
Contribution Margin
The amount remaining from sales revenue after variable expenses have been deducted, contributing to covering fixed expenses and profit.
Variable Expenses
Expenditures that change in direct relation to production levels or sales quantities.
- Examine financial records to ascertain gross margin, net income, and contribution margin.
- Comprehend the format of the contribution margin income statement and its application in distinguishing costs according to their behavior.
Verified Answer
EF
Elizabeth FigueroaMay 31, 2024
Final Answer :
True
Explanation :
Contribution Margin = Total Sales - Total Variable Expenses
$70,000 = Total Sales - $50,000
$70,000 + $50,000 = Total Sales
$120,000 = Total Sales
$70,000 = Total Sales - $50,000
$70,000 + $50,000 = Total Sales
$120,000 = Total Sales
Learning Objectives
- Examine financial records to ascertain gross margin, net income, and contribution margin.
- Comprehend the format of the contribution margin income statement and its application in distinguishing costs according to their behavior.